[Federal Register Volume 60, Number 4 (Friday, January 6, 1995)]
[Proposed Rules]
[Pages 2302-2320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2]




[[Page 2301]]

_______________________________________________________________________

Part IV

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Ch. 1



Federal Acquisition Regulation; Small Business; Proposed Rule

  Federal Register / Vol. 60, No. 4 / Friday, January 6, 1995 / 
Proposed Rules   
[[Page 2302]]

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[FAR Case 94-780]
RIN 9000-AG37


Federal Acquisition Regulation; Small Business

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule is issued pursuant to the Federal 
Acquisition Streamlining Act of 1994, Public Law 103-355 (the Act). The 
Federal Acquisition Regulatory Council is considering amending the 
Federal Acquisition Regulation (FAR) as a result of changes to 41 
U.S.C. 22 by Sections 4004, 7101, 7102, and 7106 of the Act. This 
regulatory action was not subject to Office of Management and Budget 
review under Executive Order 12866, dated September 30, 1993.

DATES: Comment Due Date: Comments should be submitted on or before 
March 7, 1995 to be considered in the formulation of a final rule.
    Public Meeting: A public meeting will be held on February 3, 1995, 
at 9:30 a.m.-
    Oral/Written Statements: Views to be presented at the public 
meeting should be sent, in writing, to the FAR Secretariat, at the 
address given below, not later than January 31, 1995.

ADDRESSES: Interested parties should submit written comments to: -
General Services Administration, FAR Secretariat (VRS), 18th & F 
Streets, NW, Room 4037, Washington, DC 20405, Telephone: (202) 501-
4755.
    The public meeting will be held at:- General Services 
Administration Auditorium, 18th & F Streets, NW, First Floor, 
Washington, DC 20405.
    Please cite FAR case 94-780 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT: Ms. Victoria Moss, Small Business Team 
Leader, at (202) 501-1143 in reference to this FAR case. For general 
information, contact the FAR Secretariat, Room 4037, GS Building, 
Washington, DC 20405 (202) 501-4755. Please cite FAR case 94-780.

SUPPLEMENTARY INFORMATION:

A. Background

    The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355 
(the Act), provides authorities that streamline the acquisition process 
and minimize burdensome government-unique requirements. Major changes 
that can be expected in the acquisition process as a result of the 
Act's implementation include changes in the areas of Commercial Item 
Acquisition, Simplified Acquisition Procedures, the Truth in 
Negotiations Act, and introduction of the Federal Acquisition Computer 
Network. In order to promptly achieve the benefits of the provisions of 
the Act, the Government is issuing implementing regulations on an 
expedited basis. We believe prompt publication of proposed rules 
provides the public the opportunity to participate more fully in the 
process of developing regulations.
    This notice announces FAR revisions developed under FAR case 94-
780. The following sections of the Federal Acquisition Streamlining Act 
are implemented by this proposed rule:
    a. Section 4004, Small Business Reservation, amends section 15(j) 
of the Small Business Act to reserve each contract for the purchase of 
goods or services that have an anticipated value greater than $2,500, 
but not greater than $100,000, for exclusive small business 
participation unless the contracting officer is unable to obtain offers 
from two or more small businesses that are competitive with market 
price, quality and delivery.-
    b. Section 7101, Repeal of Certain Requirements, paragraph (a) 
deletes sections 15(e) and (f) from the Small Business Act. These 
sections established the priority for the award of contracts and 
subcontracts in carrying out the set-aside programs.
    c. Section 7102, Contracting Program for Certain Small Business 
Concerns (not applicable to DOD, NASA, and the Coast Guard), amends 
Section 15(g)(1) of the Small Business Act to permit the Head of an 
Agency to enter into competition using less than full and open 
competition by restricting competition to small disadvantaged 
businesses (SDB's) or by using a price evaluation preference of up to 
10 percent when evaluating SDB offers received as a result of an 
unrestricted solicitation.-
    d. Section 7106, Procurement Goals for Small Business Concerns 
Owned by Women, establishes a Governmentwide goal for participation by 
women-owned small business concerns in prime contracts and subcontracts 
and revises sections 8 and 15 of the Small Business Act to accommodate 
the goal.

Public Meeting

    The FAR Council is interested in an exchange of ideas and opinions 
with respect to the regulatory implementation of the Act. For that 
reason, the FAR Council is conducting a series of public meetings. The 
public is encouraged to furnish its views; the FAR Council anticipates 
that public comments will be very helpful in formulating final rules.
    A public meeting will be held on February 3, 1995, to enable the 
public to present its views on this rule. This rule will only be 
discussed at the public meeting session. Any subsequent public meetings 
will be devoted to other revisions to the FAR.
    Persons or organizations wishing to make presentations will be 
allowed 10 minutes each to present their views, provided they notify 
the FAR Secretariat at (202) 501-4755. Written statements for 
presentation should be submitted to the FAR Secretariat by January 31, 
1995. Persons or organizations with similar positions are encouraged to 
select a common spokesman for presentation of their views. This 
meeting, in conjunction with the Federal Register notice soliciting 
public comments on the rule, will be the only opportunity for the 
public to present its views.

B. Regulatory Flexibility Act

    The proposed rule contains a number of amendments that will have a 
beneficial effect on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.; e.g., 
the rule provides for the targeting for procurements to small 
disadvantaged businesses through small disadvantaged business set-
asides and an evaluation preference in unrestricted procurements; puts 
women-owned small businesses on an equal footing with small 
disadvantaged businesses in subcontracting plan requirements; 
automatically sets aside acquisitions greater than $2,500 but not 
greater than $100,000 for small business; and simplifies and clarifies 
the small business representations. Since the rule is considered 
significantly beneficial to small entities, an Initial Regulatory 
Flexibility Analysis has not been performed. Comments from small 
entities concerning the affected FAR subpart will be considered in 
accordance with 5 U.S.C. 610 of the Act. Such comments must be 
submitted separately and should cite 5 U.S.C. 601, et seq. (FAR case 
94-780, Small Business (Pub. L. 103-355, Federal 
[[Page 2303]] Acquisition Streamlining Act of 1994)), in 
correspondence.

C. Paperwork Reduction Act-

    The Paperwork Reduction Act does apply because the proposed changes 
to the FAR affect recordkeeping and information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq. Requests for 
approval of revised clearances 9000-0006 and 9000-0007 have been 
submitted to OMB under separate cover.

List of Subjects in 48 CFR Chapter 1

    Government procurement.

    Dated: December 27, 1994.
Capt. Barry Cohen,
SC, USN, Project Manager for the Implementation of the Federal 
Acquisition Streamlining Act of 1994.-
    Therefore, it is proposed that 48 CFR Chapter 1 be amended as set 
forth below:-
    1. The authority citation for 48 CFR Chapter 1 continues to read as 
follows:

    -Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS

    2. Section 4.602 is amended by revising paragraph (a)(2) to read as 
follows:


4.602  Federal Procurement Data System.-

    (a) * * *-
    (2) a means of measuring and assessing the impact of Federal 
contracting on the Nation's economy and the extent to which small, 
small disadvantaged and women-owned small business concerns are sharing 
in Federal contracts; and
* * * * *-
    3. Section 4.603 is added to read as follows:


4.603  Solicitation provision.-

    The contracting officer shall insert the provision at 52.204-00, 
Women-Owned Business, in all solicitations exceeding the simplified 
acquisition threshold in part 13 when the contract is to be performed 
inside the United States, its territories or possessions, Puerto Rico, 
the Trust Territory of the Pacific Islands, or the District of 
Columbia.

PART 5--PUBLICIZING CONTRACT ACTIONS


5.002  [Amended]-

    4. Section 5.002 is amended in paragraph (c) by removing ``labor 
surplus area'' and inserting in its place ``women-owned small 
business''.
    5. Section 5.207 is amended in paragraph (c)(2)(xii) by removing 
``labor surplus area concerns'' and inserting in its place ``small 
disadvantaged businesses''; and by revising paragraph (d) to read as 
follows:


5.207  Preparation and transmittal of synopses.

* * * * *-
    (d) Set-asides. When the proposed acquisition provides for a total 
or partial small business set-aside or small disadvantaged business set 
aside, the appropriate CBD Numbered Note will be cited.
* * * * *


5.404-1  [Amended]

    6. Section 5.404-1 is amended in paragraph (b)(6)(ii) by removing 
``LSA'' and inserting in its place ``small disadvantaged business''.
    7. Section 5.503 is amended by revising the second sentence of 
paragraph (a) to read as follows:


5.503  Procedures.

    (a) * * * Contracting officers shall give small, small 
disadvantaged and women-owned small business concerns maximum 
opportunity to participate in these acquisitions.
* * * * *

PART 6--COMPETITION REQUIREMENTS

    8. Section 6.203 is revised to read as follows:


6.203  Set-asides for small and small disadvantaged business concerns.-

    (a) To fulfill the statutory requirements relating to small and 
small disadvantaged business concerns, contracting officers may set 
aside solicitations to allow only such business concerns to compete. 
This includes contract actions conducted under the Small Business 
Innovation Research Program established under Pub. L. 97-219.
    (b) No separate justification or determination and findings is 
required under this part to set aside a contract action for small or 
small disadvantaged business concerns.
    (c) Subpart 19.5 prescribes policies and procedures that shall be 
followed with respect to set-asides.

PART 7--ACQUISITION PLANNING-

    9. Section 7.105 is amended by revising the third sentence of 
paragraph (b)(1) to read as follows:


7.105  Contents of written acquisition plans.

* * * * *-
    (b) * * *-
    (1) * * * Include consideration of small business and small 
disadvantaged business concerns (see part 19). * * *
* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

    10. Section 8.404 is amended by revising the last sentence of 
paragraph (a) to read as follows:


8.404  Using schedules.

    (a) * * * When placing orders under a Federal Supply Schedule, 
ordering activities need not seek further competition, synopsize the 
requirement, make a separate determination of fair and reasonable 
pricing, or consider set-asides in accordance with 19.503.
* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

    11. Section 9.104-3 is amended by revising the last sentence of 
paragraph (c) to read as follows:


9.104-3  Application of standards.

* * * * *-
    (c) * * *
    If the pending contract requires a subcontracting plan pursuant to 
Subpart 19.7, Subcontracting with Small, Small Disadvantaged and Women-
Owned Small Business Concerns, the contracting officer shall also 
consider the prospective contractor's compliance with subcontracting 
plans under recent contracts.
* * * * *

PART 14--SEALED BIDDING


14.205-4  [Amended]

    12. Section 14.205-4 is amended in the fourth sentence of paragraph 
(b) by inserting after the word ``small'' the phrase ``, small 
disadvantaged and women-owned small''; and removing ``and labor surplus 
areas (see 20.104(e) and (f))''; and in the last sentence of (b)(3) by 
removing ``parts 19 and 20'' and inserting in its place ``part 19''.
    13. Section 14.206 is revised to read as follows:


14.206  Small business and small disadvantaged business set-asides.-

    (See part 19.)


14.407-6  [Amended]

    14. Section 14.407-6 is amended by removing paragraph (a)(3) and 
redesignating (a)(4) as (a)(3).


14.502  [Amended]-

    15. Section 14.502(b)(3) is amended by removing the text following 
the word [[Page 2304]] ``business'' and inserting in its place ``or 
total small disadvantaged business set-aside (see 19.503-2 and 19.503-
3).''

PART 15--CONTRACTING BY NEGOTIATION


15.705  [Amended]-

    16. Section 15.705 is amended in paragraph (b) by removing 
``business and labor surplus area'' and inserting in its place ``, 
small disadvantaged and women-owned small business''.


15.706  [Amended]-

    17. Section 15.706 is amended in paragraph (d)(4) by removing 
``labor surplus area'' and inserting in its place ``women-owned small 
business''.


15.905-1  [Amended]

    18. Section 15.905-1 is amended in the first sentence of paragraph 
(c) by inserting after the word ``individuals,'' the phrase ``women-
owned small businesses,''; and removing the phrase ``labor surplus 
areas,''.


15.1001  [Amended]

    19. Section 15.1001 is amended in paragraph (b)(2) by
    a. inserting after the word ``small'' the first place it occurs the 
phrase ``or small disadvantaged'';--
    b. removing the comma after ``19.5)'' and inserting the phrase ``or 
an award based on an evaluation preference (subpart 19.11),'' in its 
place; and--
    c. in (b)(2)(ii) by inserting after the word ``size'' the phrase 
``or small disadvantaged business''.

PART 16--TYPES OF CONTRACTS


16.103  [Amended]-

    20. Section 16.103 is amended in paragraph (d)(3) by removing the 
words ``or labor surplus area concerns''.


16.505  [Amended]

    21. Section 16.505 is amended in paragraphs (d)(4) and (d)(5)(ii) 
by removing the phrase ``or labor surplus area''.

PART 17--SPECIAL CONTRACTING METHODS


17.104-1  [Amended]

    22. Section 17.104-1 is amended--
    a. in paragraph (a) by removing the phrase ``labor surplus area'' 
and inserting in its place ``small disadvantaged business'';--
    b. in paragraph (b) by removing the phrase ``or labor surplus 
area''; and--
    c. in paragraph (b)(2) by removing ``(Partial labor surplus area 
set-asides are only authorized for DOD activities at this time.)''.

PART 19--SMALL BUSINESS PROGRAMS

    23. The title of Part 19 is revised to read as set forth above.
    24. Section 19.000 is amended in paragraph (a)(3) by inserting 
after the word ``small'' the phrase ``and small disadvantaged''; in 
(a)(6) by removing the word ``and''; in (a)(7) by removing the period 
at the end of the sentence and replacing it with ``; and''; and by 
adding (a)(8) to read as follows:


19.000  Scope of part.

    (a) * * *
    (8) The evaluation preference for small disadvantaged business 
concerns.
* * * * *
    25. Section 19.001 is amended by--
    a. adding, in alphabetical order, the definitions Labor surplus 
area, Labor surplus area concern, Set-aside, and Women-owned small 
business concern; and
    b. revising the definition Small disadvantaged business concern to 
read as follows:


19.001  Definitions.

* * * * *
    Labor surplus area means a geographical area identified by the 
Department of Labor in accordance with 20 CFR part 654, subpart A, as 
an area of concentrated unemployment or underemployment or an area of 
labor surplus.-
    Labor surplus area concern means a concern that together with its 
first-tier subcontractors will perform substantially in labor surplus 
areas. Performance is substantially in labor surplus areas if the costs 
incurred under the contract on account of manufacturing, production, or 
performance of appropriate services in labor surplus areas exceed 50 
percent of the contract price.
* * * * *
    Set-aside means an acquisition procedure under which competition is 
limited exclusively to small business or small disadvantaged business 
concerns.
* * * * *
    Small disadvantaged business concern means a small business concern 
that is at least 51 percent unconditionally owned by one or more 
individuals who are both socially and economically disadvantaged, or a 
publicly owned business that has at least 51 percent of its stock 
unconditionally owned by one or more socially and economically 
disadvantaged individuals and that has its management and daily 
business controlled by one or more such individuals. This term also 
means a small business concern that is at least 51 percent 
unconditionally owned by an economically disadvantaged Indian tribe or 
Native Hawaiian Organization, or a publicly owned business that has at 
least 51 percent of its stock unconditionally owned by one of these 
entities, that has its management and daily business controlled by 
members of an economically disadvantaged Indian tribe or Native 
Hawaiian Organization, and that meets the requirements of 13 CFR part 
124. The definition of small disadvantaged business concern is 
different for DOD, NASA and Coast Guard; see agency regulations.
    (a) Socially disadvantaged individuals means individuals who have 
been subjected to racial or ethnic prejudice or cultural bias because 
of their identity as a member of a group without regard to their 
qualities as individuals. Individuals who certify that they are members 
of named groups (Black Americans, Hispanic Americans, Native Americans, 
Asian-Pacific Americans, Subcontinent-Asian Americans) are to be 
considered socially and economically disadvantaged.
    (1) Subcontinent Asian Americans means United States citizens whose 
origins are in India, Pakistan, Bangladesh, Sri Lanka, Bhutan, or 
Nepal.
    (2) Asian Pacific Americans means United States citizens whose 
origins are in Japan, China, the Philippines, Vietnam, Korea, Samoa, 
Guam, the U.S. Trust Territory of the Pacific Islands (Republic of 
Palau), the Northern Mariana Islands, Laos, Kampuchea (Cambodia), 
Taiwan, Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, 
Republic of the Marshall Islands, or the Federated States of 
Micronesia.
    (3) Native Americans means American Indians, Eskimos, Aleuts, and 
Native Hawaiians.
    (b) Economically disadvantaged individual is defined as a socially 
disadvantaged individual whose ability to compete in the free 
enterprise system is impaired due to diminished opportunities to obtain 
capital and credit as compared to others in the same line of business 
who are not socially disadvantaged (see 13 CFR part 124).
    (c) Native Hawaiian Organization means any community service 
organization serving Native Hawaiians in, and chartered as a not-for-
profit organization by, the State of Hawaii, which is controlled by 
Native Hawaiians, and whose business activities will principally 
benefit such Native Hawaiians.
    (d) Indian tribe means any Indian tribe, band, nation, or other 
organized group or community of Indians, [[Page 2305]] including any 
Alaska Native Corporation as defined in 13 CFR 124.100 which is 
recognized as eligible for the special programs and services provided 
by the U.S. to Indians because of their status as Indians, or which is 
recognized as such by the State in which such tribe, band, nation, 
group, or community resides.
    Women-owned small business concern means a small business concern 
which is at least 51 percent owned by one or more women; or, in the 
case of any publicly owned business, at least 51 percent of the stock 
of which is owned by one or more women; and whose management and daily 
business operations are controlled by one or more women.
    26. Section 19.102 is amended by removing paragraph (f)(3); 
redesignating paragraphs (f)(4) through (f)(7) as (f)(3) through 
(f)(6); in the first sentence of redesignated paragraph (f)(4)(i) by 
removing the word ``domestic''; and revising redesignated paragraph 
(f)(5) to read as follows:


19.102  Size standards.

* * * * *
    (f) * * *-
    (5) For a specific solicitation set-aside for small business under 
19.503-3 or 8(a) under subpart 19.8, a contracting officer may request 
a waiver of that part of the nonmanufacturer rule which requires that 
the actual manufacturer or processor be a small business concern if no 
known domestic small business manufacturers or processors can 
reasonably be expected to offer a product meeting the requirements of 
the solicitation.
* * * * *-
    27. Section 19.201 is amended by revising paragraphs (a), (b), 
(c)(9), and (d) to read as follows:


19.201  General policy.-

    (a) It is the policy of the Government to place a fair proportion 
of its acquisitions, including contracts and subcontracts for 
subsystems, assemblies, components, and related services for major 
systems, with small business concerns, small disadvantaged business 
concerns, and women-owned small business concerns. Such concerns shall 
also have the maximum practicable opportunity to participate as 
subcontractors in the contracts awarded by any executive agency, 
consistent with efficient contract performance. The Small Business 
Administration (SBA) counsels and assists small business concerns and 
assists contracting personnel to ensure that a fair proportion of 
contracts for supplies and services is placed with small business.
    (b) Heads of contracting activities are responsible for effectively 
implementing the small business programs within their activities, 
including achieving program goals. They are to ensure that contracting 
and technical personnel maintain knowledge of small, small 
disadvantaged and women-owned small business program requirements and 
take all reasonable action to increase participation in their 
activities' contracting processes by these businesses.
    (c) * * *
    (9) Make recommendations in accord with agency regulations as to 
whether a particular acquisition should be awarded under subpart 19.5 
as a set-aside, or under subpart 19.8 as a section 8(a) award.
    (d) Small Business Specialists shall be appointed and act in accord 
with agency regulations.
    28. Section 19.202 is amended by revising the first sentence to 
read as follows:


19.202  Specific policies.

    In order to further the policy in 19.201(a), contracting officers 
shall comply with the specific policies listed in this section and 
shall consider recommendations of the agency Director of Small and 
Disadvantaged Business Utilization, or the Director's designee, as to 
whether a particular acquisition should be awarded under subpart 19.5 
or 19.8. * * *
    29. Section 19.202-3 is revised to read as follows:


19.202-3  Labor Surplus Area Priority.

    Priority shall be given to awarding of contracts and the placement 
of subcontracts to small business concerns which will perform 
substantially in labor surplus areas. In the event of equal low bids 
(see 14.407-6), awards shall be made first to small business concerns 
which are also labor surplus area concerns, and second to small 
business concerns which are not also labor surplus area concerns.
    30. Section 19.202-5 is amended by revising paragraphs (a) and (b) 
to read as follows:


19.202-5  Data collection and reporting requirements.

* * * * *
    (a) Require each prospective contractor to represent whether it is 
a small business, small disadvantaged business or women-owned small 
business (see the provision at 52.219-1, Small Business Program 
Representations).
    (b) Accurately measure the extent of participation by small, small 
disadvantaged, and women-owned small businesses in Government 
acquisitions in terms of the total value of contracts placed during 
each fiscal year, and report data to the SBA at the end of each fiscal 
year (see subpart 4.6).-
    31. Section 19.202-6 is amended by revising the introductory text 
and paragraph (a) to read as follows:


19.202-6  Determination of fair market price.

    Agencies shall determine the fair market price of small business 
set-aside, small disadvantaged business set-aside, and 8(a) contracts 
as follows:-
    (a) For total small business set-asides, total small disadvantaged 
business set-asides and partial small business set-aside contracts, the 
fair market price shall be the price achieved in accordance with the 
reasonable price guidelines in 15.805-2.
* * * * *-
    32. Section 19.301 is amended by revising paragraphs (a), (b), (c), 
and the first sentence of paragraph (d) to read as follows:


19.301  Representation by the offeror.

    (a) To be eligible for award as a small or a small disadvantaged 
business, an offeror must represent in good faith as to its status at 
the time of written self certification. An offeror may represent that 
it is a small business concern or a small disadvantaged business 
concern in connection with a specific solicitation if it meets the 
definitions applicable to the solicitation and has not been determined 
by the Small Business Administration (SBA) to be other than a small or 
small disadvantaged business.-
    (b) The contracting officer shall accept an offerors representation 
in a specific bid or proposal that it is a small or small disadvantaged 
business unless (1) another offeror or interested party challenges the 
concern's representation or (2) the contracting officer has a reason to 
question the representation. Challenges of and questions concerning a 
specific representation shall be referred to the SBA in accordance with 
19.302.
    (c) An offerors representation that it is a small or small 
disadvantaged business is not binding on the SBA. If an offeror's 
status is challenged, the SBA will evaluate the status of the concern 
and make a determination, which will be binding on the contracting 
officer, as to whether the offeror is a small or small disadvantaged 
business. A concern cannot become eligible for a specific award by 
taking action to meet the definition of a small business concern or 
small disadvantaged business concern [[Page 2306]] after the SBA has 
issued its determination.
    (d) If the SBA determines that the status of a concern as a ``small 
business'', a ``small disadvantaged business'' or a ''women-owned small 
business'' has been misrepresented in order to obtain a set-aside 
contract, an 8(a) subcontract, a subcontract that is to be included as 
part or all of a goal contained in a subcontracting plan, or a prime or 
subcontract to be awarded as a result, or in furtherance of any other 
provision of Federal law that specifically references section 8(d) of 
the Small Business Act for a definition of program eligibility, the SBA 
may take action as specified in section 16(d) of the Act. * * *
    33. Section 19.302 is redesignated as 19.302-1; in paragraphs 
(d)(1), introductiry text, (f), (g)(1), and (h)(1)(ii) of newly 
designated 19.302-1, remove the words ``business day'' or ``business 
days'' and insert ``workday'' or ``workdays'' in their place; and new 
19.302 heading and 19.302-2 are added to read as follows:


19.302  Protesting a small or small disadvantaged business 
representation.


19.302-1  Protesting a small business representation.

* * * * *


19.302-2  Protesting a small disadvantaged business representation.

    Any offeror, the contracting officer, the Small Business 
Administration (SBA), or other interested party may protest a concern's 
representation of disadvantaged status.
    (a) An offeror may protest a concern's representation status by 
filing a protest with the contracting officer. The protest must be 
filed within the times specified in (FAR) 48 CFR 19.302-1(d)(1) and 
must contain specific detailed evidence supporting the basis of 
protest.
    (b) The contracting officer or the SBA may protest a concern's 
representation of disadvantaged status at any time. If a contracting 
officer's protest is based on information provided by a party 
ineligible to protest directly or ineligible to protest under the 
timeliness standards, the contracting officer must be persuaded by the 
evidence presented before adopting the grounds for protest as his or 
her own. The SBA protests a concern's representation of disadvantaged 
status by filing directly with its Office of Program Eligibility and 
notifying the contracting officer.
    (c) The contracting officer shall return untimely protests to the 
protester. This includes protests filed before bid opening or 
notification of apparent successful offeror.
    (d) Upon receipt of a timely protest, the contracting officer shall 
withhold award and forward the protest to the SBA Office of Program 
Eligibility, Office of Minority Small Business and Capitol Ownership 
Development, 409 3rd Street, SW., Washington, DC 20416. Send SBA
    (1) The protest;
    (2) The date the protest was received and a determination of 
timeliness;-
    (3) A copy of the protested concern's self-certification of 
disadvantaged status; and-
    (4) The date of bid opening or date on which notification of 
apparent successful offeror was sent to unsuccessful offerors.-
    (e) Do not withhold award when the contracting officer makes a 
written determination that award must be made to protect the public 
interest.
    (f) The SBA Director, Office of Program Eligibility, will determine 
the disadvantaged status of the challenged offeror and notify the 
contracting officer, the challenged offeror, and the protester. Award 
may be made on the basis of that determination. The determination is 
final for purposes of the instant acquisition, unless (1) it is 
appealed and (2) the contracting officer receives the appeal decision 
before award.-
    (g) If the contracting officer does not receive an SBA 
determination within 15 working days after the SBA's receipt of the 
protest, the contracting officer shall presume that the challenged 
offeror is socially and economically disadvantaged. Do not use the 
presumption as a basis for award without first inquiring as to when a 
determination can be expected and waiting for the determination, unless 
further delay in award would be disadvantageous to the Government.-
    (h) An SBA determination may be appealed by (1) The interested 
party whose protest has been denied; (2) The concern whose status was 
protested; or (3) The contracting officer. The appeal must be filed 
with the SBA's Associate Administrator for Minority Small Business and 
Capital Ownership Development within five working days after receipt of 
the determination. If the contracting officer receives the SBA's 
decision of the appeal before award, the decision shall apply to the 
instant acquisition. If the decision is received after award, it will 
apply to future acquisitions.-
    34. Section 19.303 is amended by revising paragraph (a) to read as 
follows:


19.303  Determining product or service classifications.-

    (a) The contracting officer shall determine the appropriate 
standard industrial classification code and related small business size 
standard and include them in solicitations above the micro-purchase 
threshold in (FAR) 48 CFR 13.106.
* * * * *
    35. Section 19.304 is revised to read as follows:


19.304  Solicitation provisions and clause.-

    (a) The contracting officer shall insert the provision at 52.219-1, 
Small Business Program Representations, in solicitations exceeding the 
micro-purchase threshold when the contract is to be performed inside 
the United States, its territories or possessions, Puerto Rico, the 
Trust Territory of the Pacific Islands, or the District of Columbia.
    (b) The contracting officer shall insert the clause at 52.219-01, 
Priority for Labor Surplus Area Concerns, in solicitations and 
contracts that exceed the simplified acquisition threshold in part 13 
when the contract is to be performed inside the United States, its 
territories or possessions, Puerto Rico, the Trust Territory of the 
Pacific Islands, or the District of Columbia.


19.401  [Amended]-

    36. Section 19.401 is amended in paragraph (a) by removing the 
phrase ``and small disadvantaged business''.-
    37. Section 19.402 is amended by revising paragraph (c)(1)(ii) to 
read as follows:


19.402  Small Business Administration procurement center 
representatives.

* * * * *
    (c) * * *
    (1) * * *
    (ii) new qualified small, small disadvantaged and women-owned small 
business sources, and
* * * * *
    38. Subpart 19.5 is revised to read as follows:
Subpart 19.5--Set-Asides for Small and Small Disadvantaged Businesses
Sec.
19.501  General.
19.502  Set-aside program order of precedence.
19.503  Setting aside acquisitions.
19.503-1  Requirements for setting aside acquisitions.
19.503-2  Total Small Disadvantaged Business (SDB) set-asides.
19.503-3  Total small business set-asides.
19.503-4  Partial small business set-asides.
19.503-5  Methods of conducting set-asides.
19.503-6  Insufficient causes for not setting aside an ---
acquisition. [[Page 2307]] 
19.504  Setting aside a class of acquisitions.
19.505  Rejecting Small Business Administration ---recommendations.
19.506  Withdrawing or modifying set-asides.
19.507  Automatic dissolution of a set-aside.
19.508  Solicitation provisions and contract clauses.


Sec. 19.501  General.-

    (a) The purpose of set-asides is to award certain acquisitions 
exclusively to small business or small disadvantaged business concerns. 
Under a ``small business set-aside'', competition is limited to small 
business concerns. Under a ``small disadvantaged business set-aside'', 
competition is limited to small disadvantaged business concerns. A 
small business set-aside of a single acquisition or a class of 
acquisitions may be total or partial.-
    (b) The determination to make a set-aside may be unilateral or 
joint. A unilateral determination is one which is made by the 
contracting officer. A joint determination is one which is recommended 
by the Small Business Administration (SBA) procurement center 
representative and concurred in by the contracting officer.-
    (c) The contracting officer shall review acquisitions to determine 
if they can be set aside, giving consideration to the recommendations 
of agency personnel having cognizance of the agencys small business 
programs and documenting why a set-aside is inappropriate when the 
acquisition is not set aside. If the acquisition is set aside based on 
this review, it is a unilateral set-aside by the contracting officer. 
Agencies may establish threshold levels for this review depending upon 
their needs. Automated contracting systems are not exempt from the 
requirements of this subpart.-
    (d) At the request of an SBA procurement center representative, the 
contracting officer shall make available for review at the contracting 
office (to the extent of the SBA representatives security clearance) 
all proposed acquisitions in excess of the micro-purchase limitation in 
13.106 that have not been unilaterally set aside.-
    (e) To the extent practicable, unilateral determinations initiated 
by a contracting officer shall be used as the basis for set-asides 
rather than joint determinations by an SBA procurement center 
representative and a contracting officer.-
    (f) All solicitations involving set-asides must specify the 
applicable small business size standard and product classification (see 
19.303).-
    (g) Except as authorized by law, a contract may not be awarded as a 
result of a set-aside if the cost to the awarding agency exceeds the 
fair market price.-
    (h) Section 305 of Public Law 103-403 authorizes public and private 
organizations for the handicapped to participate for fiscal year 1995 
in acquisitions set-aside for small business concerns. Status as a 
small business concern is not accorded a public or private organization 
for the handicapped for the purposes of other preferential provisions 
available to small business concerns; e.g., eligibility for 
certificates of competency or higher progress payment rates.-
    (1) The contracting officer shall rely on the offeror's self-
certification in a specific bid or proposal that it is a public or 
private organization for the handicapped unless another offeror or 
interested party files a protest. An interested party may file a 
protest challenging an offeror's self-certification by forwarding the 
protest to the contracting officer by close of business on the fifth 
working day after bid opening or receipt of the 15.1001(b)(2) notice 
from the contracting officer of the apparently successful offeror. Upon 
receipt of any protest, whether timely or untimely, the contracting 
officer shall promptly forward the protest and its supporting 
documentation directly to the Associate Administrator for procurement 
Assistance, Small Business Administration. Upon receipt of a protest, 
the SBA will notify the contracting officer and the protester of the 
date it was received, and that the status of the public or private 
organization for the handicapped being challenged is under 
consideration by the SBA. Within 10 working days after receiving a 
protest, the SBA will determine the eligibility of the public or 
private organization for the handicapped and notify the contracting 
officer, the protester, and the challenged offeror of its decision by 
certified mail, return receipt requested. The determination of the 
Associate Administrator for Procurement Assistance, SBA, is final. 
Award will be made based on this determination. After receiving a 
protest involving the status of a public or private organization for 
the handicapped, the contracting officer shall not award the contract 
until (i) the SBA has made a status determination or (ii) 10 working 
days have expired since SBA's receipt of a protest, whichever occurs 
first. However, award shall not be withheld when the contracting 
officer determines in writing that an award must be made to protect the 
public interest.-
    (2) Any small business offeror which experiences or is likely to 
experience severe economic injury as a result of award to a public or 
private organization for the handicapped may file an appeal of the 
award with the contracting officer. The appeal must be received by 
close of business on the tenth working day after bid opening or receipt 
of the 15.1001(b)(2) notice from the contracting officer of the 
apparently successful offeror. Upon receipt of any appeal, whether 
timely or untimely, or whether received before or after award, the 
contracting officer shall forward the appeal and supporting 
documentation directly to the Associate Administrator for Procurement 
Assistance, Small Business Administration, whose decision shall be 
final. The contracting officer should, when practical, withhold award 
until expiration of the 10-day appeal period, or; when an appeal is 
filed, withhold award until the contracting officer receives the SBA 
determination of appeal, unless delay would be disadvantageous to the 
Government. The SBA shall notify the contracting officer of the SBA 
determination and advise the agency or department to take such action 
as may be appropriate to alleviate economic injury sustained or likely 
to be sustained by the concern.


19.502  Set-aside program order of precedence.-

    (a) In carrying out set-aside programs, contracting officers shall 
award contracts in the following order of precedence:-
    (1) A total set-aside for small disadvantaged business concerns.
    (2) A total set-aside for small business concerns.
    (3) A partial set-aside for small business concerns.
    (b) Set-aside priorities of the Department of Defense, the National 
Aeronautics and Space Administration, and the Coast Guard are set forth 
in the respective agency FAR Supplements.


19.503  Setting aside acquisitions.


19.503-1  Requirements for setting aside acquisitions.

    Using the order of precedence in 19.502, the contracting officer 
shall set aside an individual acquisition or class of acquisitions when 
it is determined to be in the interest of (a) maintaining or mobilizing 
the Nations full productive capacity, (b) war or national defense 
programs, or (c) assuring that a fair proportion of Government 
contracts in each industry category is placed with small business 
concerns, and when the circumstances described in 19.503-2, 19.503-3, 
or 19.503-4 exist. This requirement does not affect the responsibility 
of agencies to make purchases from required sources of 
[[Page 2308]] supply such as Federal Prison Industries, Industries for 
People who are Blind or Severely Disabled, and multiple-award Federal 
Supply Schedule contracts.


19.503-2  Total Small Disadvantaged Business (SDB) set-asides.

    (a) The contracting officer shall set aside any acquisition over 
the micro-purchase threshold for small disadvantaged business 
participation when there is a reasonable expectation that--
    (1) Offers will be obtained from at least two responsible SDB 
concerns offering the products of different small disadvantaged 
business (but see paragraph (c) of this subsection); and
    (2) Awards will be made at fair market prices unless otherwise 
provided by law.
    (b) The contracting officer shall not set aside acquisitions for 
small disadvantaged business concerns when:
    (1) The supply or service has been successfully acquired as a small 
business set aside;
    (2) The acquisition is reserved for the 8(a) program;
    (3) The Small Business Administration has determined that no small 
business manufacturer exists (see 19.102(f)(4); or
    (4) As otherwise determined by the Agency Head or designee.
    (c) For industries where the contracting officer finds that there 
are no small disadvantaged business manufacturers, the contracting 
officer may authorize the small disadvantaged business regular dealers 
to provide the product of any small business concern.
    (d) The Agency head or designee is authorized to determine whether 
use of small disadvantaged business set-asides has caused a particular 
industry category to bear a disproportionate share of the contracts 
awarded by a particular contracting activity to achieve its small 
disadvantaged business goal. Upon making a determination that a 
particular industry is bearing a disproportionate share, the Agency 
Head or designee may limit the use of small disadvantaged business set-
asides in the affected industry category, at the contracting activity. 
This limitation shall not apply to solicitations that already have been 
publicized as small disadvantaged business set-asides. Requests for 
determinations shall be forwarded through agency channels to the Agency 
head or designee and include--
    (1) The standard industrial classification (SIC) code(s) affected;
    (2) Supporting information to justify the request, including 
dollars and percentages by the contracting activity, under the affected 
SIC code(s) for the previous two fiscal years and current fiscal year 
to date for--
    (i) Total awards;
    (ii) Total awards to small businesses;
    (iii) Total awards to small disadvantaged businesses; and
    (iv) Awards to small disadvantaged businesses under small 
disadvantaged business set-asides.
    (e) Small disadvantaged business set-aside requirements and 
procedures for DOD, NASA and Coast Guard are different and are set 
forth in agency supplements.


19.503-3  Total small business set-asides.

    (a) Except as provided in paragraph (b), each acquisition of 
supplies or services that has an anticipated dollar value exceeding the 
micro-purchase threshold in 13.106 but not over $100,000, is 
automatically reserved exclusively for small business concerns and 
shall be set-aside. This requirement does not preclude the award of a 
contract with a value not greater than $100,000 under 19.8, Contracting 
with the Small Business Administration; 19.1006(c), emerging small 
business set-asides; or 19.503-2, as a small disadvantaged business 
set-aside.
    (b) This requirement does not apply to acquisitions over $25,000 
during the period when set-asides cannot be considered for the four 
designated industry groups (see 19.1006(b)).
    (c) The contracting officer shall set aside any acquisition over 
$100,000 for small business participation when there is a reasonable 
expectation that (1) offers will be obtained from at least two 
responsible small business concerns offering the products of different 
small business concerns (but see paragraph (e) of this section); and 
(2) awards will be made at fair market prices. Total set-asides shall 
not be made unless such a reasonable expectation exists (but see 
19.503-4 as to partial set-asides). Although past acquisition history 
of the item or similar items is always important, it is not the only 
factor to be considered in determining whether a reasonable expectation 
exists. In making R&D small business set-asides, there must also be a 
reasonable expectation of obtaining from small businesses the best 
scientific and technological sources consistent with the demands of the 
proposed acquisition for the best mix of cost, performances, and 
schedules.-
    (d) Acquisitions shall not be totally set-aside for small business 
concerns when (1) the supply or service has been successfully acquired 
as a small disadvantaged business set-aside; or (2) the acquisition is 
reserved under the 8(a) program.
    (e) In industries where the SBA finds that there are no small 
business manufacturers, it may waive the nonmanufacturers rule for 
regular dealers (see 19.102(f)(4)). This would permit small business 
regular dealers to provide any firm's product. In these cases, the 
contracting officer's determination in paragraph (c)(1) of this 
subsection will be based on offers from at least two responsible small 
business regular dealers offering the products of different concerns.


19.503-4  Partial small business set-asides.

    (a) The contracting officer shall set aside a portion of an 
acquisition, except for construction, for exclusive small business 
participation when--
    (1) A total small business or small disadvantaged business set-
aside is not appropriate;
    (2) The requirement is severable into two or more economic 
production runs or reasonable lots;
    (3) One or more small business concerns are expected to have the 
technical competence and productive capacity to satisfy the set-aside 
portion of the requirement at a fair market price;
    (4) The acquisition is not subject to simplified acquisition 
procedures; and
    (5) A partial set-aside shall not be made if there is a reasonable 
expectation that only two concerns (one large and one small) with 
capability will respond with offers unless authorized by the head of a 
contracting activity on a case-by-case basis. Similarly, a class of 
acquisitions, not including construction, may be partially set aside. 
Under certain specified conditions, partial set-asides may be used in 
conjunction with multiyear contracting procedures.
    (b) When the contracting officer determines that a portion of an 
acquisition is to be set aside, the requirement shall be divided into a 
set-aside portion and a non-set-aside portion, each of which shall (1) 
be an economic production run or reasonable lot and (2) have terms and 
a delivery schedule comparable to the other. When practicable, the set-
aside portion should make maximum use of small business capacity.-
    (c)(1) The contracting officer shall award the non-set-aside 
portion using normal contracting procedures.-
    (2)(i) After all awards have been made on the non-set-aside 
portion, the contracting officer shall negotiate with eligible concerns 
on the set-aside portion, as provided in the solicitation, and make 
award. Negotiations shall be conducted only with those offerors who 
have submitted responsive offers on the non-set-aside portion. 
Negotiations shall [[Page 2309]] be conducted with small business 
concerns in the order of priority as indicated in the solicitation (but 
see paragraph (c)(2)(ii) of this section). The set-aside portion shall 
be awarded as provided in the solicitation. An offeror entitled to 
receive the award for quantities of an item under the non-set-aside 
portion and who accepts the award of additional quantities under the 
set-aside portion shall not be requested to accept a lower price 
because of the increased quantities of the award, nor shall negotiation 
be conducted with a view to obtaining such a lower price based solely 
upon receipt of award of both portions of the acquisition. This does 
not prevent acceptance by the contracting officer of voluntary 
reductions in the price from the low eligible offeror before award, 
acceptance of voluntary refunds, or the change of prices after award by 
negotiation of a contract modification.-
    (ii) If equal low offers are received on the non-set-aside portion 
from concerns eligible for the set-aside portion, the concern that is 
awarded the non-set-aside part of the acquisition shall have first 
priority with respect to negotiations for the set-aside.


19.503-5  Methods of conducting set-asides.-

    Total set-asides may be conducted by using simplified acquisition 
procedures (see part 13), sealed bids (see part 14), competitive 
proposals (see part 15), or procedures for acquisition of commercial 
items (see part 12). Partial small business set-asides may be conducted 
using sealed bids (see part 14), competitive proposals (see part 15), 
or procedures for acquisition of commercial items (see part 12).


19.503-6  Insufficient causes for not setting aside an acquisition.-

    None of the following is, in itself, sufficient cause for not 
setting aside an acquisition:-
    (a) A large percentage of previous contracts for the required 
item(s) has been placed with small business concerns.-
    (b) The item is on an established planning list under the 
Industrial Readiness Planning Program. However, a total set-aside shall 
not be made when the list contains a large business Planned Emergency 
Producer of the item(s) who has conveyed a desire to supply some or all 
of the required items.-
    (c) The item is on a Qualified Products List. However, a total set-
aside shall not be made if the list contains the products of large 
businesses unless none of the large businesses desire to participate in 
the acquisition.-
    (d) A period of less than 30 days is available for receipt of 
offers.-
    (e) The contract is classified.-
    (f) Small business concerns are already receiving a fair proportion 
of the agency's contracts for supplies and services.-
    (g) A class set-aside of the item or service has been made by 
another contracting activity.-
    (h) A ``brand name or equal'' product description will be used in 
the solicitation.


19.504  Setting aside a class of acquisitions.-

    (a) A class of acquisitions of selected products or services, or a 
portion of the acquisitions, may be set aside for exclusive 
participation by small business concerns if individual acquisitions in 
the class will meet the criteria in 19.503-1, 19.503-3, or 19.503-4. 
The determination to make a class set-aside shall not depend on the 
existence of a current acquisition if future acquisitions can be 
clearly foreseen.-
    (b) The determination to set aside a class of acquisitions may be 
either unilateral or joint.-
    (c) Each class small business set-aside determination shall be in 
writing and must---
    (1) Specifically identify the product(s) and service(s) it covers;-
    (2) Provide that the set-aside does not apply to any acquisition of 
$100,000 or less;
    (3) Provide that the set-aside applies only to the (named) 
contracting office(s) making the determination; -
    (4) Provide that the set-aside does not apply to any individual 
acquisition if the requirement is not severable into two or more 
economic production runs or reasonable lots, in the case of a partial 
class set-aside; and-
    (5) Provide that the procurement was not previously set aside for 
small disadvantaged business by the (named) contracting office(s).-
    (d) The contracting officer shall review each individual 
acquisition arising under a class set-aside to identify any changes in 
the magnitude of requirements, specifications, delivery requirements, 
or competitive market conditions that have occurred since the initial 
approval of the class set-aside. If there are any changes of such a 
material nature as to result in probable payment of more than a fair 
market price by the Government or in a change in the capability of 
small business concerns to satisfy the requirements, the contracting 
officer may withdraw or modify (see 19.506(a)) the unilateral or joint 
set-aside by giving written notice to the SBA procurement center 
representative (if one is assigned), stating the reasons.


19.505  Rejecting Small Business Administration recommendations.-

    (a) If the contracting officer rejects a recommendation of the SBA 
procurement center representative or breakout procurement center 
representative, written notice shall be furnished to the appropriate 
SBA center representative within 5 workdays of the contracting 
officer's receipt of the recommendation.-
    (b) The SBA procurement center representative may appeal the 
contracting officer's rejection to the head of the contracting activity 
(or designee) within 2 workdays after receiving the notice. The head of 
the contracting activity (or designee) shall render a decision in 
writing, and provide it to the SBA representative within 7 workdays. 
Pending issuing the decision to the SBA procurement center 
representative, the contracting officer shall suspend action on the 
acquisition.-
    (c) If the head of the contracting activity agrees that the 
contracting officer's rejection was appropriate, the SBA procurement 
center representative may--
    (1) Within 1 workday, request the contracting officer to suspend 
action on the acquisition until the SBA Administrator appeals to the 
agency head (see paragraph (f) of this section); and-
    (2) The SBA shall be allowed 15 workdays after making such a 
written request, within which the Administrator of SBA (i) may appeal 
to the Secretary of the Department concerned, and (ii) shall notify the 
contracting officer whether the further appeal has, in fact, been 
taken. If notification is not received by the contracting officer 
within the 15-day period, it shall be deemed that the SBA request to 
suspend contracting action has been withdrawn and that an appeal to the 
Secretary was not taken.-
    (d) When the contracting officer has been notified within the 15-
day period that the SBA has appealed to the agency head, the head of 
the contracting activity (or designee) shall forward justification for 
its decision to the agency head. The contracting officer shall suspend 
contract action until notification is received that the SBA appeal has 
been settled.-
    (e) The agency head shall reply to the SBA within 30 workdays after 
receiving the appeal. The decision of the agency head shall be final.-
    (f) A request to suspend action on an acquisition need not be 
honored if the contracting officer determines that 
[[Page 2310]] proceeding to contract award and performance is in the 
public interest. The contracting officer shall include in the contract 
file a statement of the facts justifying the determination, and shall 
promptly notify the SBA representative of the determination and provide 
a copy of the justification.-
    (g) Procedures for rejecting SDB set-aside recommendations are 
different for DOD, NASA, and Coast Guard and are set forth in agency 
supplements.


19.506  Withdrawing or modifying set-asides.-

    (a) If, before award of a contract involving a set-aside, the 
contracting officer considers that award would be detrimental to the 
public interest (e.g., payment of more than a fair market price), the 
contracting officer may withdraw the set-aside determination whether it 
was unilateral or joint. The contracting officer shall initiate a 
withdrawal of an individual set-aside by giving written notice to the 
agency small business specialist and the SBA procurement center 
representative, if one is assigned, stating the reasons. In a similar 
manner, the contracting officer may modify a unilateral or joint class 
set-aside to withdraw one or more individual acquisitions.-
    (b) If the agency small business specialist does not agree to a 
withdrawal or modification, the case shall be promptly referred to the 
SBA representative (if one is assigned) for review. If an SBA 
representative is not assigned, disagreements between the agency small 
business specialist and the contracting officer shall be resolved using 
agency procedures. However, the procedures are not applicable to 
automatic dissolutions of set-asides (see 19.507) or dissolution of 
set-asides under $100,000. -
    (c) The contracting officer shall prepare a written statement 
supporting any withdrawal or modification of a set-aside and include it 
in the contract file.


19.507  Automatic dissolution of a set-aside.-

    (a) If a set-aside acquisition or portion of an acquisition is not 
awarded, the unilateral or joint determination to set the acquisition 
aside is automatically dissolved for the unawarded portion of the set-
aside. The required supplies and/or services for which no award was 
made may be acquired by sealed bidding or negotiation, as appropriate.-
    (b) Before issuing a solicitation for the items called for in a 
set-aside that was dissolved, the contracting officer shall ensure that 
the delivery schedule is realistic in the light of all relevant 
factors, including the capabilities of small or small disadvantaged 
business concerns.


19.508  Solicitation provisions and contract clauses.-

    (a)-(b) [Reserved] -
    (c) The contracting officer shall insert the clause at 52.219-6, 
Notice of Total Small Business Set-Aside, in solicitations and 
contracts involving total small business set-asides (see 19.503-3). The 
clause at 52.219-6 with its Alternate I will be used when the 
acquisition is for a product in a class for which the Small Business 
Administration has determined that there are not small business 
manufacturers in the Federal market in accordance with 19.503-3(e).-
    (d) The contracting officer shall insert the clause at 52.219-7, 
Notice of Partial Small Business Set-Aside, in solicitations and 
contracts involving partial small business set-asides (see 19.503-4). 
The clause at 52.219-7 with its Alternate I will be used when the 
acquisition is for a product in a class for which the Small Business 
Administration has determined that there are not small business 
manufacturers in the Federal market in accordance with 19.503-3(e).-
    (e) The contracting officer shall insert the clause at 52.219-14, 
Limitations on Subcontracting, in solicitations and contracts expected 
to exceed $100,000 for supplies, services, and construction, if any 
portion of the requirement is to be set aside for small or small 
disadvantaged business, or if the contract is to be awarded under 
subpart 19.8.-
    (f) The contracting officer shall insert the clause at 52.219-15, 
Notice of Participation by Organizations for the Handicapped, in 
solicitations and contracts issued through September 30, 1995, 
involving total or partial small business set-asides.-
    (g) The contracting officer shall insert the clause at 52.219-00, 
Notice of Total Small Disadvantaged Business Set-Aside, in 
solicitations and contracts involving total small disadvantaged 
business set-asides (see 19.503-2). The clause at 52.219-00 with its 
Alternate I will be used when the acquisition is for a product in a 
class for which the contracting officer has determined that there are 
not small disadvantaged business manufacturers or processors in 
accordance with 19.503-2(c).

Subpart 19.7--Subcontracting With Small Business, Small 
Disadvantaged Business and Women-Owned Small Business Concerns

    39. The title of Subpart 19.7 is revised to read as set forth 
above.-
    40. Section 19.702 is amended by revising the introductory text and 
paragraph (b)(4) to read as follows:


19.702  Statutory requirements.-

    Any contractor receiving a contract for more than the simplified 
acquisition threshold in 13.000 shall agree in the contract that small 
business concerns, small disadvantaged business concerns and women-
owned small business concerns shall have the maximum practicable 
opportunity to participate in contract performance consistent with its 
efficient performance. It is further the policy of the United States 
that its prime contractors establish procedures to ensure the timely 
payment of amounts due pursuant to the terms of their subcontracts with 
small business concerns, small disadvantaged business concerns and 
women-owned small business concerns.
* * * * *
    (b)* * *
    (4) For modifications to contracts that do not contain the clause 
at 52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned 
Small Business Concerns (or equivalent prior clauses).
* * * * *
    41. Section 19.703 is amended by revising paragraph (a) 
introductory text, (a)(1), and (b) to read as follows:


19.703  Eligibility requirements for participating in the program.

    (a) To be eligible as a subcontractor under the program, a concern 
must represent itself as a small business concern, small disadvantaged 
business concern or a woman-owned small business concern.
    (1) To represent itself as a small business concern or a women-
owned small business concern, a concern must meet the appropriate 
definition in 19.001.
* * * * *
    (b) A contractor acting in good faith may rely on the written 
representation of its subcontractor regarding the subcontractor's 
status. The contractor, the contracting officer, or any other 
interested party can challenge a subcontractor's size status 
representation by filing a protest, in accordance with 13 CFR 121.1601 
through 121.1608. Protests challenging a subcontractor's disadvantaged 
status representation shall be filed in accordance with 13 CFR 124.601 
through 124.610. Protests challenging a subcontractor's status as a 
women-owned small business concern shall be filed in accordance with 
Small Business Administration procedures. [[Page 2311]] 
    42. Section 19.704 is amended by revising paragraphs (a)(1), 
(a)(3), (a)(4), (a)(6), and (b) to read as follows:


19.704  Subcontracting plan requirements.

    (a)* * *
    (1) Separate percentage goals for using small business concerns, 
small disadvantaged business concerns and women-owned small business 
concerns as subcontractors;
* * * * *
    (3) A description of the efforts the offeror will make to ensure 
that small business concerns, small disadvantaged business concerns and 
women-owned small business concerns will have an equitable opportunity 
to compete for subcontracts;
    (4) Assurances that the offeror will include the clause at 52.219-
8, Utilization of Small, Small Disadvantaged and Women-owned Small 
Business Concerns (see 19.708(b)), in all subcontracts that offer 
further subcontracting opportunities, and that the offeror will require 
all subcontractors (except small business concerns) that receive 
subcontracts in excess of $500,000 ($1,000,000 for construction) to 
adopt a plan similar to the plan required by the clause at 52.219-9, 
Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan (see 19.708(c));
* * * * *
    (6) A recitation of the types of records the offeror will maintain 
to demonstrate procedures adopted to comply with the requirements and 
goals in the plan, including establishing source lists; and a 
description of the offeror's efforts to locate small, small 
disadvantaged and women-owned small business concerns and to award 
subcontracts to them.
    (b) Contractors may establish, on a plant or division wide basis, a 
master subcontracting plan which contains all the elements required by 
the clause at 52.219-9, Small, Small Disadvantaged and Women-Owned 
Small Business Subcontracting Plan, except goals. Master plans shall be 
effective for a 1-year period after approval by the contracting 
officer; however, a master plan when incorporated in an individual plan 
shall apply to that contract throughout the life of the contract.
* * * * *


19.705-1  [Amended].

    43. Section 19.705-1 is amended in the first sentence by removing 
the phrase ``for Small and Small Disadvantaged Business Concerns''.
    44. Section 19.705-4 is amended by revising the last sentences of 
paragraphs (b) and (c); the first sentence of paragraphs (d)(1) and 
(d)(5); and revising (d)(4) to read as follows:


19.705-4  Reviewing the subcontracting plan.

* * * * *
    (b) * * * If the plan, although responsive, evidences the bidder's 
intention not to comply with its obligations under the clause at 
52.219-8, Utilization of Small, Small Disadvantaged and Women-owned 
Small Business Concerns, the contracting officer may find the bidder 
nonresponsible.
    (c) * * * An incentive subcontracting clause (see 52.219-10, 
Incentive Subcontracting Program), may be used when additional and 
unique contract effort, such as providing technical assistance, could 
significantly increase subcontract awards to small, small disadvantaged 
or women-owned small businesses.
    (d) * * * (1) Evaluate the offeror's past performance in awarding 
subcontracts for the same or similar products or services to small, 
small disadvantaged and women-owned small business concerns. * * *
* * * * *
    (4) Evaluate subcontracting potential, considering the offeror's 
make-or-buy policies or programs, the nature of the products or 
services to be subcontracted, the known availability of small, small 
disadvantaged and women-owned small business concerns in the 
geographical area where the work will be performed, and the potential 
contractor's long-standing contractual relationship with its suppliers.
    (5) Advise the offeror of available sources of information on 
potential small, small disadvantaged and women-owned small business 
subcontractors, as well as any specific concerns known to be potential 
subcontractors. * * *
* * * * *


19.705-7  [Amended].

    45. Section 19.705-7 is amended--
    a. in the first sentence of paragraph (a) by removing the word 
``and'' the first time it is used and replacing it with a comma; and 
adding the phrase ``and women-owned small'' after the word 
``disadvantaged'';
    b. in the third sentence of paragraph (d) by removing the words 
``business and'' and replacing them with a comma; and adding the phrase 
``and women-owned small'' after the word ''disadvantaged'';
    c. in paragraph (f) by removing the words ``Business and'' and 
replacing them with a comma; and adding the phrase ``and Women-Owned 
Small'' after the word ``Disadvantaged''.
    46. Section 19.706 is amended by revising paragraphs (a)(2) and 
(a)(3) to read as follows:


19.706  Responsibilities of the cognizant administrative contracting 
officer.

    (a) * * *
    (2) Information on the extent to which the contractor is meeting 
the plan's goals for subcontracting with eligible small, small 
disadvantaged and women-owned small business concerns;
    (3) Information on whether the contractor's efforts to ensure the 
participation of small, small disadvantaged and women-owned small 
business concerns are in accordance with its subcontracting plan;
* * * * *
    47. Section 19.708 is amended by revising paragraph (a) 
introductory text, (b) and (c) to read as follows:


19.708  Solicitation provisions and contract clauses.

    (a) The contracting officer shall insert the clause at 52.219-8, 
Utilization of Small, Small Disadvantaged and Women-Owned Small 
Business Concerns, in solicitations and contracts when the contract 
amount is expected to be over the simplified acquisition threshold in 
13.000 unless--
* * * * *
    (b)(1) The contracting officer shall, when contracting by 
negotiation, insert the clause at 52.219-9, Small, Small Disadvantaged 
and Women-Owned Small Business Subcontracting Plan, in solicitations 
and contracts that (i) offer subcontracting possibilities, (ii) are 
expected to exceed $500,000 ($1,000,000 for construction of any public 
facility), and (iii) are required to include the clause at 52.219-8, 
Utilization of Small, Small Disadvantaged and Women-Owned Small 
Business Concerns, unless the acquisition has been set-aside or is to 
be accomplished under the 8(a) program. When contracting by sealed 
bidding rather than by negotiation, the contracting officer shall use 
the clause with its Alternate I.
    (2) The contracting officer shall insert the clause at 52.219-16, 
Liquidated Damages--Subcontracting Plan, in all solicitations and 
contracts containing the clause at 52.219-9, Small, Small Disadvantaged 
and Women-Owned Small Business Subcontracting Plan, or its Alternate 
I.-
    (c)(1) The contracting officer may, when contracting by 
negotiation, insert in solicitations and contracts a clause 
substantially the same as the clause at 52.219-10, Incentive 
Subcontracting [[Page 2312]] Program, when a subcontracting plan is 
required (see 19.702(a)(1)), and inclusion of a monetary incentive is, 
in the judgment of the contracting officer, necessary to increase 
subcontracting opportunities for small, small disadvantaged and women-
owned small business concerns, and is commensurate with the efficient 
and economical performance of the contract; unless the conditions in 
paragraph (c)(3) of this section are applicable. The contracting 
officer may vary the terms of the clause as specified in paragraph 
(c)(2) of this section.
    (2) Various approaches may be used in the development of small, 
small disadvantaged and women-owned small business concerns' 
subcontracting incentives. They can take many forms, from a fully 
quantified schedule of payments based on actual subcontract achievement 
to an award-fee approach employing subjective evaluation criteria (see 
paragraph (c)(3) of this section). The incentive should not reward the 
contractor for results other than those that are attributable to the 
contractor's efforts under the incentive subcontracting program.
    (3) As specified in paragraph (c)(2) of this section, the 
contracting officer may include small, small disadvantaged and women-
owned small business subcontracting as one of the factors to be 
considered in determining the award-fee in a cost-plus-award-fee 
contract; in such cases, however, the contracting officer shall not use 
the clause at 52.219-10, Incentive Subcontracting Program.

Subpart 19.9--[Removed and Reserved]

    48. Subpart 19.9, consisting of sections 19.901 and 19.902, is 
removed and reserved.
    49. Section 19.1006 is amended by revising paragraph (b)(1); in 
paragraph (c)(1)(i) by removing ``13.105 or''; and in paragraph (c)(3) 
by removing ``small purchase'' and inserting in its place ``simplified 
acquisition''. The revised text reads as follows:


19.1006  Procedures.

* * * * *
    (b) * * *
    (1) Solicitations for acquisitions in any of the four designated 
industry groups issued from January 1, 1989, through September 30, 
1996, that have an anticipated dollar value greater than $25,000 shall 
not be considered for small business set-asides under subpart 19.503-3 
or 19.503-4 (however, see paragraphs (b)(2) and (c)(1) of this 
section). Acquisitions in the designated industry groups shall continue 
to be considered for placement under the 8(a) program (see subpart 
19.8) or as small disadvantaged business set-asides (see 19.503-2). 
During the period when set-asides cannot be considered for acquisitions 
in the four designated industry groups, the evaluation preference at 
19.11 shall not be used.
* * * * *
    50. Subpart 19.11 is added to read as follows:
Subpart 19.11--Evaluation Preference for Small Disadvantaged Business 
Concerns
Sec.
19.1100  Policy.
19.1101  Applicability.
19.1102  Procedures.
19.1103  Contract clause.


19.1100  Policy.

    Offers from small disadvantaged business concerns shall be given an 
evaluation preference in accordance with this subpart. Evaluation 
preference for small disadvantaged business concerns is different for 
DOD, NASA and Coast Guard, see agency supplements.


19.1101  Applicability.

    The evaluation preference shall be used in unrestricted, 
competitive acquisitions where award is based on price and price-
related factors. The preference may be used at the discretion of the 
source selection authority in other competitive acquisitions. Do not 
use the evaluation preference in acquisitions which are set-aside under 
subpart 19.5.


19.1102  Procedures.

    (a) Give offers from small disadvantaged business concerns a 
preference in evaluation by adding a factor of 10 percent (or a 
different percentage not exceeding 10 percent, if required by agency 
regulations) to the price of all offers, except--
    (1) Offers from small disadvantaged business concerns which have 
not waived the evaluation preference;
    (2) Otherwise successful offers of eligible products under the 
Trade Agreements Act when the acquisition equals or exceeds the dollar 
threshold in (FAR) 48 CFR 25.402; or
    (3) Offers where application of the factor would be inconsistent 
with a Memorandum of Understanding or other international agreement 
with a foreign government.
    (b) Apply the factor on a line item by line item basis or apply it 
to any group on which award may be made. Add other evaluation factors 
such as transportation costs or rent-free use of Government facilities 
to the offers before applying the 10 percent factor.
    (c) Do not evaluate offers using the preference when it would cause 
award to be made at a price which exceeds fair market price by more 
than 10 percent.


19.1103  Contract clause.

    -Use the clause at 52.219.02, Notice of Evaluation Preference for 
Small Disadvantaged Business Concerns, in solicitations and contracts 
involving unrestricted, competitive acquisitions where award is based 
on price and price related factors. Use the clause with its Alternate I 
when the contracting officer determines that there are not small 
disadvantaged business manufacturers that can meet the requirements of 
the solicitation.

PART 20--[RESERVED]

    51. Part 20 is removed and reserved.

PART 25--FOREIGN ACQUISITION


25.105  [Amended]

    52. Section 25.105 is amended in paragraph (a)(1) by removing the 
phrase ``that is not a labor surplus area concern''; and in paragraph 
(a)(2) by removing the phrase ``or any labor surplus area concern''.


25.404  [Reserved]

    53. Section 25.404 is removed and reserved.


25.1002  [Amended]

    54. Section 25.1002 is amended in paragraph (b)(2) by removing the 
text following the word ``small'' and inserting in its place ``or small 
disadvantaged business set asides under 19.503-2 and 19.503-3.''

PART 26--OTHER SOCIOECONOMIC PROGRAMS


26.104  [Amended]

    55. Section 26.104 is amended in paragraphs (a) and (b) by removing 
``Business and'' and inserting a comma in its place; and inserting 
after the word ``Disadvantaged'' the phrase ``and Women-Owned Small''.

PART 42--CONTRACT ADMINISTRATION

    56. Section 42.302 is amended by revising paragraphs (a)(52) 
through (a)(55) to read as follows:


42.302  Contract administration functions.

* * * * *
    (a) * * *
    (52) Review, evaluate, and approve plant or division-wide small, 
small disadvantaged and women-owned small business master 
subcontracting plans.
    (53) Obtain the contractor's currently approved company- or 
division-wide [[Page 2313]] plans for small, small disadvantaged and 
women-owned small business subcontracting for its commercial products, 
or, if there is no currently approved plan, assist the contracting 
officer in evaluating the plans for those products.
    (54) Assist the contracting officer, upon request, in evaluating an 
offeror's proposed small, small disadvantaged and women-owned small 
business subcontracting plans, including documentation of compliance 
with similar plans under prior contracts.
    (55) By periodic surveillance, ensure the contractor's compliance 
with small, small disadvantaged and women-owned small business 
subcontracting plans and any labor surplus area contractual 
requirements; maintain documentation of the contractor's performance 
under and compliance with these plans and requirements; and provide 
advice and assistance to the firms involved, as appropriate.
* * * * *


42.501  [Amended]

    57. Section 42.501 is amended in paragraph (b) by removing the word 
``and'' and inserting a comma in its place; and inserting after the 
word ``disadvantaged'' the phrase ``and women-owned small''.
    58. Section 42.502 is amended by revising paragraphs (i) and (j) to 
read as follows:


42.502  Selecting contracts for postaward orientation.

* * * * *
    (i) Contractor's status, if any, as a small business, small 
disadvantaged or women-owned small business concern;
    (j) Contractor's performance history with small, small 
disadvantaged and women-owned small business subcontracting programs;
* * * * *

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES


44.202-2  [Amended]

    59. Section 44.202-2 is amended in paragraph (a)(4) by removing the 
phrase ``labor surplus area or''; removing the words ``business 
concerns and'' and inserting a comma in its place; and inserting after 
the word ``disadvantaged'' the phrase ``and women-owned small''.


44.303  [Amended]

    59. Section 44.303 is amended in paragraph (e) by removing the 
phrase ``labor surplus area concerns and''; and inserting after the 
word ``disadvantaged'' the phrase ``and women-owned small''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    60. Section 52.204-00 is added to read as follows:


52.204-00  Women-Owned Business.

    As prescribed in 4.603, insert the following provision:

Women-Owned Business (Date)

    (a) Representation. The offeror represents that it {time}  is, 
{time}  is not a women-owned business concern.
    (b) Definition. ``Women-owned business concern,'' as used in 
this provision, means a concern which is at least 51 percent owned 
by one or more women; or in the case of any publicly owned business, 
at least 51 percent of the stock of which is owned by one or more 
women; and whose management and daily business operations are 
controlled by one or more women.


52.216-21  [Amended]

    61. Section 52.216-21 is amended in the introductory text of 
Alternates III and IV by removing the phrase ``or labor surplus area''.
    62. Section 52.219-1 is revised to read as follows:


52.219-1  Small Business Program Representations.

    As prescribed in 19.304(a), insert the following provision:

Small Business Program Representations (Date)

    -(a)(1) The standard industrial classification (SIC) code for 
this acquisition is ________________ (insert SIC code).
    (2) The small business size standard is ________________ (insert 
size standard).
    (3) The small business size standard for a concern which submits 
an offer in its own name, other than on a construction or service 
contract, but which proposes to furnish a product which it did not 
itself manufacture, is 500 employees.
    (b) Representations. (1) The offeror represents and certifies as 
part of its offer that it {time}  is, {time}  is not a small 
business concern.
    (2) The offeror represents and certifies as part of its offer 
that it {time}  is, {time}  is not a small disadvantaged business 
concern.
    (3) The offeror represents as part of its offer that it {time}  
is, {time}  is not a women-owned small business concern.
    (c) Definitions. Small business concern, as used in this 
provision, means a concern, including its affiliates, that is 
independently owned and operated, not dominant in the field of 
operation in which it is bidding on Government contracts, and 
qualified as a small business under the criteria in 13 CFR part 121 
and size standard above.
    Small disadvantaged business concern, as used in this provision, 
means a small business concern that (1) is at least 51 percent 
unconditionally owned by one or more individuals who are both 
socially and economically disadvantaged, or a publicly owned 
business having at least 51 percent of its stock unconditionally 
owned by one or more socially and economically disadvantaged 
individuals and (2) has its management and daily business controlled 
by one or more such individuals. This term also means a small 
business concern that is at least 51 percent unconditionally owned 
by an economically disadvantaged Indian tribe or Native Hawaiian 
Organization, or a publicly owned business having at least 51 
percent of its stock unconditionally owned by one or more of these 
entities which has its management and daily business controlled by 
members of an economically disadvantaged Indian tribe or Native 
Hawaiian Organization, and which meets the requirements of 13 CFR 
part 124.
    Women-owned small business concern, as used in this provision, 
means a small business concern at least 51 percent owned by a woman 
or women or, in the case of any publicly owned business, at least 51 
percent of the stock is owned by one or more women; and whose 
management and daily business operations are controlled by one or 
more women.
    (d) Notice. Under 15 U.S.C. 645(d), any person who misrepresents 
a firm's status as a small or small disadvantaged business concern 
in order to obtain a contract to be awarded under the preference 
programs established pursuant to sections 8(a), 8(d), 9, or 15 of 
the Small Business Act or any other provision of Federal law that 
specifically references section 8(d) for a definition of program 
eligibility, shall--
    (1) Be punished by imposition of fine, imprisonment, or both;
    (2) Be subject to administrative remedies, including suspension 
and debarment; and
    (3) Be ineligible for participation in programs conducted under 
the authority of the Act.

(End of provision)


52.219-2 thru 52.219-5  [Reserved]

    63. Sections 52.219-2 through 52.219-5 are removed and reserved.-
    64. Section 52.219-6 is amended by revising Alternate I to read as 
follows:


52.219-6  Notice of Total Small Business Set-Aside.

* * * * *-
    Alternate I (DATE). When the acquisition is for a product in a 
class for which the Small Business Administration has determined 
that there are no small business manufacturers or processors in the 
Federal market in accordance with 19.503-3(e), delete paragraph (c).

    65. Section 52.219-7 is amended by revising the date of the clause; 
in paragraph (a) by removing the definitions Labor surplus area, Labor 
surplus area concern, and Perform substantially in labor surplus areas; 
and by revising paragraphs (b)(4) and (c) and Alternate I to read as 
follows:


52.219-7  Notice of Partial Small Business Set-Aside.

* * * * * [[Page 2314]] 

Notice of Partial Small Business Set-Aside (Date)

* * * * *
    (b) * * *
    (4) The contractor(s) for the set-aside portion will be selected 
from among the small business concerns that submitted responsive 
offers on the non-set-aside portion. Negotiations will be conducted 
with the concern that submitted the lowest responsive offer on the 
non-set-aside portion. If the negotiations are not successful or if 
only part of the set-aside portion is awarded to that concern, 
negotiations will be conducted with the concern that submitted the 
second-lowest responsive offer on the non-set-aside portion. This 
process will continue until a contract or contracts are awarded for 
the entire set-aside portion.
* * * * *
    (c) Agreement. For the set-aside portion of the acquisition, a 
manufacturer or regular dealer submitting an offer in its own name 
agrees to furnish, in performing the contract, only end items 
manufactured or produced by small business concerns inside the 
United States, its territories and possessions, the Commonwealth of 
Puerto Rico, the Trust Territory of the Pacific Islands, or the 
District of Columbia. However, this requirement does not apply in 
connection with construction or service contracts.

(End of clause)

    Alternate I (DATE). When the acquisition is for a product in a 
class for which the Small Business Administration has determined 
that there are no small business manufacturers or processors in the 
Federal market in accordance with 19.503-3(e), delete paragraph 
(c).-

    66. Section 52.219-8 is amended by revising the section heading; 
the clause title and date; paragraph (a); redesignating paragraph (d) 
as (e) and revising it; and adding a new paragraph (d) to read as 
follows:


52.219-8  Utilization of Small, Small Disadvantaged and Women-Owned 
Small Business Concerns.

* * * * *

Utilization of Small, Small Disadvantaged and Women-Owned Small 
Business Concerns (Date)

    (a) It is the policy of the United States that small business 
concerns, small business concerns owned and controlled by socially 
and economically disadvantaged individuals and small business 
concerns owned and controlled by women shall have the maximum 
practicable opportunity to participate in performing contracts let 
by any Federal agency, including contracts and subcontracts for 
subsystems, assemblies, components, and related services for major 
systems. It is further the policy of the United States that its 
prime contractors establish procedures to ensure the timely payment 
of amounts due pursuant to the terms of their subcontracts with 
small business concerns, small business concerns owned and 
controlled by socially and economically disadvantaged individuals 
and small business concerns owned and controlled by women.
* * * * *
    (d) The term ``small business concern owned and controlled by 
women'' shall mean a small business concern (i) which is at least 51 
percent owned by one or more women, or, in the case of any publicly 
owned business, at least 51 percent of the stock of which is owned 
by one or more women, and (ii) whose management and daily business 
operations are controlled by one or more women, and;
    (e) Contractors acting in good faith may rely on written 
representations by their subcontractors regarding their status as a 
small business concern, a small business concern owned and 
controlled by socially and economically disadvantaged individuals or 
a small business concern owned and controlled by women.

(End of clause)

    67. Section 52.219-9 is amended by revising--
    a. The section heading;
    b. The clause title and date;
    c. The first sentence of paragraph (c);
    d. Paragraphs (d), (e), (i), and Alternate I to read as follows:


52.219-9  Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan.

* * * * *

Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan (Date)

* * * * *
    (c) The offeror, upon request by the Contracting Officer, shall 
submit and negotiate a subcontracting plan, where applicable, which 
separately addresses subcontracting with small business concerns, 
with small disadvantaged business concerns and with women-owned 
small business concerns. * * *
    (d) The offeror's subcontracting plan shall include the 
following:-
    (1) Goals, expressed in terms of percentages of total planned 
subcontracting dollars, for the use of small business concerns, 
small disadvantaged business concerns and women-owned small business 
concerns as subcontractors. The offeror shall include all 
subcontracts that contribute to contract performance, and may 
include a proportionate share of products and services that are 
normally allocated as indirect costs.-
    (2) A statement of--
    (i) Total dollars planned to be subcontracted;
    (ii) Total dollars planned to be subcontracted to small business 
concerns;
    (iii) Total dollars planned to be subcontracted to small 
disadvantaged business concerns; and
    (iv) Total dollars planned to be subcontracted to women-owned 
small business concerns;
    (3) A description of the principal types of supplies and 
services to be subcontracted, and an identification of the types 
planned for subcontracting to (i) small business concerns, (ii) 
small disadvantaged business concerns and (iii) women-owned small 
business concerns.
    (4) A description of the method used to develop the 
subcontracting goals in (1) above.
    (5) A description of the method used to identify potential 
sources for solicitation purposes (e.g., existing company source 
lists, the Procurement Automated Source System (PASS) of the Small 
Business Administration, the National Minority Purchasing Council 
Vendor Information Service, the Research and Information Division of 
the Minority Business Development Agency in the Department of 
Commerce, or small, small disadvantaged and women-owned small 
business concerns trade associations).-
    (6) A statement as to whether or not the offeror included 
indirect costs in establishing subcontracting goals, and a 
description of the method used to determine the proportionate share 
of indirect costs to be incurred with (i) small business concerns, 
(ii) small disadvantaged business concerns and (iii) women-owned 
small business concerns.
    (7) The name of the individual employed by the offeror who will 
administer the offerors subcontracting program, and a description of 
the duties of the individual.
    (8) A description of the efforts the offeror will make to assure 
that small, small disadvantaged and women-owned small business 
concerns have an equitable opportunity to compete for subcontracts.
    (9) Assurances that the offeror will include the clause in this 
contract entitled ``Utilization Of Small, Small Disadvantaged And 
Women-Owned Small Business Concerns in all subcontracts that offer 
further subcontracting opportunities, and that the offeror will 
require all subcontractors (except small business concerns) who 
receive subcontracts in excess of $500,000 ($1,000,000 for 
construction of any public facility), to adopt a plan similar to the 
plan agreed to by the offeror.
    (10) Assurances that the offeror will (i) cooperate in any 
studies or surveys as may be required, (ii) submit periodic reports 
in order to allow the Government to determine the extent of 
compliance by the offeror with the subcontracting plan, (iii) submit 
Standard Form (SF) 294, Subcontracting Report for Individual 
Contracts, and/or SF 295, Summary Subcontract Report, in accordance 
with the instructions on the forms, and (iv) ensure that its 
subcontractors agree to submit Standard Forms 294 and 295.
    (11) A recitation of the types of records the offeror will 
maintain to demonstrate procedures that have been adopted to comply 
with the requirements and goals in the plan, including establishing 
source lists; and a description of its efforts to locate small, 
small disadvantaged and women-owned small business concerns and 
award subcontracts to them. The records shall include at least the 
following (on a plant-wide or company-wide basis, unless otherwise 
indicated):
    (i) Source lists, guides, and other data that identify small, 
small disadvantaged and women-owned small business concerns.
    (ii) Organizations contacted in an attempt to locate sources 
that are small, small disadvantaged or women-owned small business 
concerns. [[Page 2315]] 
    (iii) Records on each subcontract solicitation resulting in an 
award of more than $100,000, indicating (A) whether small business 
concerns were solicited and if not, why not, (B) whether small 
disadvantaged business concerns were solicited and if not, why not, 
(C) whether women-owned small business concerns were solicited and 
if not, why not, and (D) if applicable, the reason award was not 
made to a small business concern.
    (iv) Records of any outreach efforts to contact (A) trade 
associations, (B) business development organizations, and (C) 
conferences and trade fairs to locate small, small disadvantaged and 
women-owned small business sources.
    (v) Records of internal guidance and encouragement provided to 
buyers through (A) workshops, seminars, training, etc., and (B) 
monitoring performance to evaluate compliance with the program's 
requirements.
    (vi) On a contract-by-contract basis, records to support award 
data submitted by the offeror to the Government, including the name, 
address, and business size of each subcontractor. Contractors having 
company or division-wide annual plans need not comply with this 
requirement.
    (e) In order to effectively implement this plan to the extent 
consistent with efficient contract performance, the Contractor shall 
perform the following functions:
    (1) Assist small, small disadvantaged and women-owned small 
business concerns by arranging solicitations, time for the 
preparation of bids, quantities, specifications, and delivery 
schedules so as to facilitate the participation by such concerns. 
Where the Contractors lists of potential small, small disadvantaged 
and women-owned small business subcontractors are excessively long, 
reasonable effort shall be made to give all such small business 
concerns an opportunity to compete over a period of time.
    (2) Provide adequate and timely consideration of the 
potentialities of small, small disadvantaged and women-owned small 
business concerns in all ``make-or-buy'' decisions.
    (3) Counsel and discuss subcontracting opportunities with 
representatives of small, small disadvantaged and women-owned small 
business firms.
    (4) Provide notice to subcontractors concerning penalties and 
remedies for misrepresentations of business status as small, small 
disadvantaged or women-owned small business for the purpose of 
obtaining a subcontract that is to be included as part or all of a 
goal contained in the Contractor's subcontracting plan.
* * * * *
    (i) The failure of the Contractor or subcontractor to comply in 
good faith with (1) the clause of this contract entitled 
``Utilization Of Small, Small Disadvantaged And Women-Owned Small 
Business Concerns,'' or (2) an approved plan required by this 
clause, shall be a material breach of the contract.

(End of clause)

    Alternate I (DATE). When contracting by sealed bidding rather 
than by negotiation, substitute the following paragraph (c) for 
paragraph (c) of the basic clause:
    (c) The apparent low bidder, upon request by the Contracting 
Officer, shall submit a subcontracting plan, where applicable, which 
separately addresses subcontracting with small business concerns, 
with small disadvantaged business concerns and with women-owned 
small business concerns. If the bidder is submitting an individual 
contract plan, the plan must separately address subcontracting with 
small business concerns, with small disadvantaged business concerns 
and with women-owned small business concerns with a separate part 
for the basic contract and separate parts for each option (if any). 
The plan shall be included in and made a part of the resultant 
contract. The subcontracting plan shall be submitted within the time 
specified by the Contracting Officer. Failure to submit the 
subcontracting plan shall make the bidder ineligible for the award 
of a contract.


52.219-10  [Amended]

    68. Section 52.219-10 is amended in--
    a. The section heading and clause title by removing ``for Small and 
Small Disadvantaged Business Concerns'' and revising the date;
    b. The introductory text of the clause by removing the text 
following ``19.708(c)(1),'' and inserting in its place ''insert the 
following clause:''; and
    c. Paragraph (a) of the clause by removing the word ''and'', 
inserting a comma in its place, and removing the period at the end of 
the sentence and inserting in its place ``and a certain percentage to 
women-owned small business concerns.''


52.219-13  [Reserved]

    69. Section 52.219-13 is removed and reserved.
    70. Section 52.219-16 is amended by revising the section heading, 
clause title and date; paragraph (a); the first sentence of paragraph 
(b); and paragraphs (d) and (f) to read as follows:


52.219-16  Liquidated Damages--Subcontracting Plan.

* * * * *

Liquidated Damages--Subcontracting Plan (Date)

    (a) Failure to make a good faith effort to comply with the 
subcontracting plan, as used in this clause, means a willful or 
intentional failure to perform in accordance with the requirements 
of the subcontracting plan approved under the clause in this 
contract entitled ``Small, Small Disadvantaged and Women-Owned Small 
Business Subcontracting Plan,'' or willful or intentional action to 
frustrate the plan.
    (b) If, at contract completion, or in the case of a commercial 
products plan, at the close of the fiscal year for which the plan is 
applicable, the Contractor has failed to meet its subcontracting 
goals and the Contracting Officer decides in accordance with 
paragraph (c) of this clause that the Contractor failed to make a 
good faith effort to comply with its subcontracting plan, 
established in accordance with the clause in this contract entitled 
Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan, the Contractor shall pay the Government 
liquidated damages in an amount stated.* * *
* * * * *
    (d) With respect to commercial products plans; i.e., company-
wide or division-wide subcontracting plans approved under paragraph 
(g) of the clause in this contract entitled, Small, Small 
Disadvantaged and Women-Owned Small Business Subcontracting Plan, 
the Contracting Officer of the agency that originally approved the 
plan will exercise the functions of the Contracting Officer under 
this clause on behalf of all agencies that awarded contracts covered 
by that commercial products plan.
* * * * *
    (f) Liquidated damages shall be in addition to any other 
remedies that the Government may have.

(End of clause)


52.219-22  [Reserved]

    71. Section 52.219-22 is removed and reserved.
    72. Section 52.219-00 is added to read as follows:


52.219-00  Notice of Total Small Disadvantaged Business Set-Aside.

    As prescribed in 19.508(g), insert the following clause in 
solicitations and contracts:

Notice of Total Small Disadvantaged Business Set-Aside (Date)

    (a) Definition--Small disadvantaged business concern, as used in 
this clause, means a small business concern that (a) is at least 51 
percent unconditionally owned by one or more individuals who are 
both socially and economically disadvantaged, or a publicly owned 
business having at least 51 percent of its stock unconditionally 
owned by one or more socially and economically disadvantaged 
individuals and (b) has its management and daily business controlled 
by one or more such individuals. This term also means a small 
business concern that is at least 51 percent unconditionally owned 
by an economically disadvantaged Indian tribe or Native Hawaiian 
Organization, or a publicly owned business having at least 51 
percent of its stock unconditionally owned by one of these entities 
which has its management and daily business controlled by members of 
an economically disadvantaged Indian tribe or Native Hawaiian 
Organization, and which meets the requirements of 13 CFR part 124.
    (b) General--(1) Offers are solicited only from small 
disadvantaged business concerns. Offers received from concerns that 
are not small disadvantaged business concerns shall be considered 
nonresponsive and will be rejected.
    (2) Any award resulting from this solicitation will be made to a 
small disadvantaged business concern.
    (c) Agreement. A manufacturer or regular dealer submitting an 
offer in its own name [[Page 2316]] agrees to furnish, in performing 
the contract, only end items manufactured or produced by small 
disadvantaged business concerns inside the United States, its 
territories and possessions, the Commonwealth of Puerto Rico, the 
Trust Territory of the Pacific Islands, or the District of Columbia. 
However, this requirement does not apply in connection with 
construction or service contracts.

(End of clause)

    Alternate I (Date). When the acquisition is for a product in a 
class for which the contracting officer has determined that there 
are no small disadvantaged business manufacturers or processors in 
accordance with 19.503-2(c), substitute the following paragraph (c) 
for paragraph (c) of the basic clause:
    (c) Agreement. A manufacturer or regular dealer submitting an 
offer in its own name agrees to furnish, in performing the contract, 
only end items manufactured or produced by small business concerns 
inside the United States, its territories and possessions, the 
Commonwealth of Puerto Rico, the Trust Territory of the Pacific 
Islands, or the District of Columbia. However, this requirement does 
not apply in connection with construction or service contracts.

    73. Section 52.220-1 is redesignated as 52.219-01 and revised to 
read as follows:


52.219-01  Priority for Labor Surplus Area Concerns.

    As prescribed in 19.304(b), insert the following provision:

Priority for Labor Surplus Area Concerns (Date)

    (a) The offeror's status as a labor surplus area concern may 
affect entitlement to award in case of tie offers. In order to 
determine whether the offeror is entitled to a priority, the offeror 
must identify, below, the LSA in which the costs to be incurred on 
account of manufacturing or production (by the offeror or the first-
tier subcontractors) amount to more than 50 percent of the contract 
price.

----------------------------------------------------------------------

----------------------------------------------------------------------

    (b) Failure to identify the labor surplus areas as specified 
above will preclude the offeror from receiving priority 
consideration. If the offeror is awarded a contract as a result of 
receiving priority consideration under this clause and would not 
have otherwise qualified for award, the offeror shall perform the 
contract or cause the contract to be performed in accordance with 
the obligations of an LSA concern.

(End of provision)

    74. Section 52.219-02 is added to read as follows:


52.219-02  Notice of Evaluation Preference for Small Disadvantaged 
Business Concerns.

    As prescribed in 19.1103, insert the following clause:

Notice of Evaluation Preference for Small Disadvantaged Business 
Concerns (Date)

    (a) Definition--Small disadvantaged business concern, as used in 
this clause, means a small business concern that (a) is at least 51 
percent unconditionally owned by one or more individuals who are 
both socially and economically disadvantaged, or a publicly owned 
business having at least 51 percent of its stock unconditionally 
owned by one or more socially and economically disadvantaged 
individuals and (b) has its management and daily business controlled 
by one or more such individuals. This term also means a small 
business concern that is at least 51 percent unconditionally owned 
by an economically disadvantaged Indian tribe or Native Hawaiian 
Organization, or a publicly owned business having at least 51 
percent of its stock unconditionally owned by one of these entities 
which has its management and daily business controlled by members of 
an economically disadvantaged Indian tribe or Native Hawaiian 
Organization, and which meets the requirements of 13 CFR part 124.
    (b) Evaluation preference--(1) Offers will be evaluated by 
adding a factor of ten percent to the price of all offers, except--
    (i) Offers from small disadvantaged business concerns, which 
have not waived the preference;
    (ii) Otherwise successful offers of eligible products under the 
Trade Agreements Act when the dollar threshold for application of 
the Act is exceeded;
    (iii) Offers where application of the factor would be 
inconsistent with a Memorandum of Understanding or other 
international agreement with a foreign government.
    (2) The ten percent factor will be applied on a line item by 
line item basis or to any group of items on which award may be made. 
Other evaluation factors described in the solicitation will be 
applied before application of the ten percent factor. The ten 
percent factor will not be applied if using the preference would 
cause the contract award to be made at a price which exceeds the 
fair market price by more than ten percent.
    (c) Waiver of evaluation preference. A small disadvantaged 
business may elect to waive the preference, in which case the ten 
percent factor will be added to its offer for evaluation purposes. 
The agreements in paragraph (d) do not apply to offers which waive 
the preference.
    ________ Offeror elects to waive the preference.
    (d) Agreements--(1) A small disadvantaged business concern which 
did not waive the preference, agrees that in performance of the 
contract, in the case of a contract for--
    (i) Services, except construction, at least 50 percent of the 
cost of personnel for contract performance will be spent for 
employees of the concern.-
    (ii) Supplies, at least 50 percent of the cost of manufacturing, 
excluding the cost of materials, will be performed by the concern.
    (iii) General construction, at least 15 percent of the cost of 
the contract, excluding the cost of materials, will be performed by 
employees of the concern.
    (iv) Construction by special trade contractors, at least 25 
percent of the cost of the contract, excluding the cost of 
materials, will be performed by employees of the concern.
    (2) A small disadvantaged business submitting an offer in its 
own name agrees to furnish in performing this contract only end 
items manufactured or produced by small disadvantaged business 
concerns.
    Alternate I (Date). When the acquisition is for a product in a 
class for which the contracting officer has determined that there 
are no small disadvantaged business manufacturers or processors in 
accordance with 19.503-2(c), substitute the following paragraph 
(d)(2) for paragraph (d)(2) of the basic clause:
    (d)(2) A small disadvantaged business submitting an offer in its 
own name agrees to furnish, in performing the contract, only end 
items manufactured or produced by small business concerns inside the 
United States, its territories and possessions, the Commonwealth of 
Puerto Rico, the Trust Territory of the Pacific Islands, or the 
District of Columbia. However, this requirement does not apply in 
connection with construction or service contracts.


52.220-1  [Redesignated]


52.220-2, 52.220-3, and 52.220-4  [Removed and reserved]

    75. Sections 52.220-2, 52.220-3, and 52.220-4 are removed and 
reserved.

PART 53--FORMS

    76. Section 53.219 is revised to read as follows:


53.219  Small business programs.

    The following standard forms are prescribed for use in reporting 
small, small disadvantaged and women-owned small business 
subcontracting data, as specified in part 19:
    (a) SF 294 (REV XX), Subcontracting Report for Individual 
Contracts. (See 19.704(a)(5).)
    (b) SF 295 (REV XX), Summary Subcontract Report. (See 
19.704(a)(5).) SF 295 is authorized for local reproduction and a copy 
is furnished for this purpose in part 53 of the loose-leaf edition of 
the FAR.
    77. Sections 53.301-294 and 53.301-295 are revised to read as 
follows:


53.301-294  Subcontracting Reporting for Individual Contracts.

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                                53.301-295  Summary Subcontract Report.
[[Page 2319]]

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[FR Doc. 95-2 Filed 1-5-95; 8:45 am]
BILLING CODE 6820-34-C